Medical Marijuana (NASDAQOTH:MJNA) and GW Pharmaceuticals (NASDAQ:GWPH) are pioneers of the burgeoning legal cannabis space. However, these two early birds have had a markedly different trajectory since going public. GW's stock has raced higher ever since its  IPO on the NASDAQ stock exchange in May 2013. Medical Marijuana's shares, by contrast, have lost most of their value since their public debut approximately 10 years ago

Is GW still the better growth vehicle or is Medical Marijuana now an attractive turnaround candidate? Let's dig in to find out. 

A bottle of CBD oil next to a handful of marijuana buds set against a white background.

Image source: Getty Images.

The case for Medical Marijuana

Medical Marijuana, despite its namesake, doesn't sell marijuana in any form. Instead, the company's business centers around hemp-based products. The Real Scientific Hemp Oil family of products is presently the company's main source of revenue, but it has interests in a wide berth of other derivative product categories, including dietary supplements, skin care products, and even prescription medications.

There are two big draws with this stock for potential investors. First off,  the recent approval of the 2018 U.S. Farm Bill essentially legalized hemp and hemp-based products stateside. As a result, Medical Marijuana's core business is now legitimate in the U.S. for the most part, although there could be additional headwinds coming down the pike from the U.S. Food and Drug Administration (FDA) over unapproved health claims and quality control standards. 

Secondly, hemp-based cannabidiol (CBD for short) oils are experiencing a surge in demand across North America. Interestingly enough, a good chunk of this sharp rise in demand is the result of seniors experimenting with CBD oils as an alternative to costly prescription medications for a variety of chronic and acute ailments. With senior citizens making up a greater proportion of the U.S. population than ever before, this is undoubtedly an encouraging trend for CBD oil companies like Medical Marijuana. 

In addition to CBD oils, Medical Marijuana has ownership stakes in the cannabis-oriented chewing gum company CanChew Biotechnologies, the hemp-focused pet entity Phyto Animal Health, the biotherapeutic company KannalifeTM Sciences, Inc., and Axim Biotechnologies. Whether any of these ancillary business development moves will pay off remains to be seen. But Medical Marijuana is at least attempting to broaden its revenue stream and move into other high-margin areas such as prescription medicines. 

The bad news is that Medical Marijuana's stock is now priced at less than $0.07 per share. In order to attract blue chip investors, the company will have to dramatically increase the value of its shares -- and that probably means a reverse split (reducing the number of outstanding shares to increase the price per share). 

The case for GW Pharmaceuticals

If you were smart enough to buy $10,000 worth of GW's stock at its IPO less than six years ago and never sold a single share in the interim, you'd be staring at a sum of over $184,000 in your account today. In short, this cannabis-oriented drugmaker has been one of the absolute best growth vehicles in the market since its debut. 

What's all the fuss about? Recently, GW became the first company ever to gain a regulatory approval from the FDA for a cannabis-derived drug. Specifically, the company's Epidiolex is now approved for two forms of early onset epilepsy: Dravet syndrome and Lennox-Gastaut syndrome, respectively. Equally as important, the drug is performing exceptionally well since its commercial launch -- fueled by strong demand and broad coverage from third-party payers, despite the drug's stately $32,500 annual list price.

Looking ahead, GW is slated to roll out additional late-stage results for Epidiolex in patients with uncontrollable seizures caused by tuberous sclerosis complex later this month. Moreover, the company is working on gaining regulatory approval for Epidiolex in the European Union. 

While the news cycle has been overwhelmingly positive for GW for a few years now, there is a serious drawback with this stock. Right now, GW's shares sport a ginormous price-to-sales ratio of 190. Investors are thus clearly banking on Epidiolex's sales growing at an exponential rate from here on out. 

Which of these stocks is the better buy?

Despite GW's premium valuation, this cannabis-oriented stock is clearly the better buy. If Epidiolex can achieve blockbuster status (annual sales topping $1 billion) in the next three years like some industry insiders predict, GW's shares will actually look like a bargain in hindsight. Medical Marijuana, on the other hand, has to move out of the penny stock realm before it can be considered an attractive cannabis play. Penny stocks, after all, are prone to dizzying bouts of volatility due to a lack of institutional and blue chip investors.